Top media firm unable to recover costs because CFA did not cover much of its work

A leading media law firm has lost the recovery of hundreds of thousands of pounds in costs after the High Court upheld a master’s ruling that its conditional fee agreement (CFA) did not cover much of the work it did.

Taylor Hampton (TH) was acting for individual and corporate defendants in an action brought by Oscar-nominated film director Michael Radford over a project to make a Spanish film called La Mula.

In Radford & Anor v Frade & Ors[2016] EWHC 1600 (QB), Mr Justice Warby explained that Mr Radford was retained to direct the film but in time the parties fell out and the director left the shoot and was replaced.

In July 2010, Mr Radford and the partnership through which he traded started legal action and obtained injunctions, which included prohibiting the defendants from using or publishing film footage he had shot without his authority.

Taylor Hampton and Augustus Ullstein QC were instructed under CFAs to set aside the injunctions and also dispute the jurisdiction of the English court and service of the proceedings.

Warby J recounted: “The initial objective was substantially achieved by a consent order made by Tugendhat J on 23 May 2012… By this point the substantive proceedings against the individual defendants were over. But they continued against the corporate defendants.”

TH successfully applied for summary judgment, and Sir David Eady dismissed an application for permission to appeal against it on 28 July 2014. The defendants became entitled to recover their costs.

Master Eyre made an order for payment of £120,000 on account of costs, which was upheld by Sir David.

In the detailed assessment proceedings TH submitted a bill in the sum of £805,500. This was on the basis that all the work carried out by the firm and Mr Ullstein was done pursuant to their CFAs, and they were entitled to recover success fees accordingly.

However, Master Haworth in the Senior Courts Costs Office ruled that the work done by TH between 23 May 2012 and 28 July 2014 was outside the scope of the CFA, and that the defendants were not liable to pay for it.

“It is said that the effect is to disallow most of the defendants’ costs,” Warby J noted.

Master Haworth ruled that the CFA – which was adapted from the Law Society model – was meant to cover only procedural issues such as service and jurisdiction.

He continued: “The consequence of my finding is that the defendants had obtained a win as defined by the agreement by 23 May 2012. By that date the scope of the agreement had come to an end and accordingly the defendants are unable to recover costs from the claimants under the terms of the CFA from that date.”

Mr Justice Warby rejected criticism of the master’s decision. “In the end, one comes back to the meaning of the words used, in their context,” the High Court judge said. “The work for which the parties contracted under the CFA was limited to the pursuit of procedural points which had already been identified, on the basis of which the defendants were to seek to get rid of the claim and obtain damages under the cross-undertaking and possibly an anti-suit injunction.

“That work came to an end on the making of the consent order of 23 May 2012. It is common ground that the CFA did not extend to work on the defence of the claim, or the counterclaim. It did not, on its true construction, extend to work on the much later application to strike out or for summary judgment.”

He also knocked back the argument that the original retainer had survived the creation of the CFA. And while the conduct of the parties indicated an unwritten retainer on a conditional fee basis for the period after 23 May 2012, the solicitors “failed to take the precaution of ensuring that this CFA was reduced to writing so as to satisfy section 58(3)(a) of the Courts and Legal Services Act 1990”.

Master Haworth had also ruled that the defendants could not recover any fees for work done by counsel after 23 May 2012, because his CFA was made with TH, and the clients had no liability to pay TH.

He further found that, in any event, no fees could be recovered for work done by counsel in respect of the corporate defendants, who were not identified as counsel’s clients in his CFA with TH. There was an attempt to address this second problem with a deed of rectification in July 2015 during the assessment proceedings.

Warby J rejected appeals on these points too, ruling in relation to the attempted rectification: “The effect of a costs order is to create a liability to pay, subject to assessment, those costs which a party has paid or is liable to pay at the time the order is made. The liability to pay costs crystallises at that point and, although its quantum will remain to be worked out, that process must be governed by the liabilities of the receiving party as they stand at that time.

“To allow enforcement of a retrospective agreement which increases those liabilities would be to alter retrospectively the effect of the court’s order.”

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